BofAML: EUR Has Topped And Gold Will Surprise To The Upside

EURUSD has topped out, BofAML's Macneil Curry notes, as the break of 1.3548 confirmed a bearish turn in the medium-term trend, targeting 18-month trendline support at 1.3144. Furthermore, Curry warns, longer-term charts suggest this could be the start of something significantly more bearish - targeting the 200-month average at 1.2187. Despite this USD strength, Curry adds, gold remains curiously bid and could squeeze to $1,399.

Via BofAML's Macneil Curry,

€/$ breakdown

€/$ broke down sharply Friday, closing through key support at 1.3564/ 1.3548 (100d avg and Jan-09 low) and confirming a near term, potentially medium term, turn in trend. We have gone short on the break of 1.3548, targeting 18m trendline support at 1.3144. However, long term charts warn that this turn could be the start of something significantly more bearish, targeting the 200m avg at 1.2187. While more needs to be seen before we can make this call with confidence (a break of the 1.3295 Nov-07 low would increase our confidence), long term interest rate spreads support this scenario. Indeed, the US-GER 10yr spread continues on its well defined widening spread towards 132bps.

€/$ begins its downtrend

€/$ is breaking down. The impulsive decline from 1.3893 and subsequent break of the 100d avg says the trend has turned bearish. The initial target is the 200d avg at 1.3349, but this should be only temporary support before the 18m t/line at 1.3144.

Weekly charts warns that this is the start of something more

A bigger picture view of €/$ warns that this most recent turn lower (from the Dec-27 high of 1.3893) could be the beginning of a much larger bear trend towards the 200m at 1.2187. To be clear, more needs to be seen (like a close below the 1.3295 Nov-07 low) before we can make this call with confidence, but the potential is there

US-GER 10yr Spread supports a lower €/$

The US-GER 10yr Spread continues on its well defined, long term widening trend. The break of long term channel resistance, coupled with the Head and Shoulders Base targets 124bps/132ps and potentially beyond. This is €/$ bearish

Gold squeeze

Despite the recent strength of the US $, precious metals remain very well supported. Last week we highlighted the bullish potential for Silver, now Gold looks poised to surprise to the topside. A break of the 1270 pivot should be the catalyst for short squeeze higher, exposing the confluence of resistance between 1362/1399

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Sorry this is a Gold post. My comment was on Bitcoin. I get the two confused.

It is NY not Congress that are holding upcoming hearings.

Officials will hold a public hearing Jan. 28 and Jan. 29at which investors, law enforcement officials and computer engineers will provide insight into virtual currencies. One of the aims is to determine whether businesses accepting or transferring bitcoin should be licensed, which is required of wire transfer services.

There has been a barrage of gold articles lately all pointing to the upside. From a cynical viewpoint, it seems that either the wise guys have loaded the truck slowly and will be pushing hard upwards or they are setting up everyone for the biggest smack-down ever.

Tell me it's the first and not the latter.

I am staying with the physical already at the bottom of the lake no matter what happens

"[T]here have been a few instances of “forks,” moments when part of the network accepted one new block as valid while another part rejected it and accepted a different block.

These incidents happened for accidental reasons, but a fork could someday be the result of malicious action.
It is generally thought that it would be too expensive for a single malicious user (or group of malicious users) to take over more than half of the network; but if bitcoin were to grow significantly in value, this calculation could change."

"The aggregate operating cost of the mining pool is what protects the bitcoin system from an attack (it becomes vulnerable if someone controls >50% of mining resources).

However, unfortunately this is not the case in the actual implementation, and this is a well known vulnerability of the system.Once the mining profits will drop significantly (in about 5-10 years) there will be less miners protecting the system, and it will be more vulnerable to attacks."

"Two computer science researchers from Cornell find that this extensive ecosystem can be undermined and they outline how in a paper that they have posted on arXiv.

The paper, "Majority is not Enough: Bitcoin Mining is Vulnerable," is by Ittay Eyal, a post doc member of the Computer Sciences department at Cornell and Emin Gun Sirer, associate professor at Cornell. According to the two researchers, "Empirical evidence shows that Bitcoin miners behave strategically and form pools. “Specifically, because rewards are distributed at infrequent, random intervals miners form mining pools in order to decrease the variance of their income rate. Within such pools, all members contribute to the solution of each cryptopuzzle, and share the rewards proportionally to their contributions. To the best of our knowledge, so far such pools have been benign and followed the protocol." The authors wrote that central to Bitcoin operations is a public log called the blockchain where all transactions are recorded. The security of the blockchain is established by a chain of cryptographic puzzles solved by a loosely organized network of participants called miners.The two researchers present an attack with which colluding miners obtain a revenue larger than their fair share.'This attack can have significant consequences for Bitcoin," they warned, where rational miners join selfish miners and the colluding group increases in size until it becomes a majority. At this point, they said, the Bitcoin system ceases to be a decentralized currency.'"

I don't like the double bottom premise since the second bottom is on much lighter volume then the first. I'd rather wait for a long term down trend line to be broken or see a panic to or below the 1000 level with run-for-the-hills headlines.

Seek, I see your point but TA is still good. Just realise how the boys play the game, they KNOW how most people use TA so attempt to fuck them up. So when they're playing their games look to go with them, ie when they get eveyone in, the then get everyone out - that's the time to go with the boys. USE THEM like they're using everyone else.

In physical gold, it's the Arabs that get or "it's game over" for important oil flows (bear in mind China is a larger consumer, for now and SA knows debt laden economies won't be the VIP customer they once were, now Chinese politics matter), and Chinese buyers just bid up gold on the margin, both for internal use, and re-export westward into India through market channels.

In physical gold, it's the Arabs that get or "it's game over" for important oil flows (bear in mind China is http://www.sydneyleather.com.au a larger consumer, for now and SA knows debt laden economies won't be the VIP customer they once were, now Chinese politics matter), and Chinese buyers just bid up gold on the margin, both for internal use, and re-export westward into India through market channels.